Hollister Medical India Pvt. Ltd., New Delhi V. DCIT, Circle- 11(1), New Delhi

ITA 4133/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8865 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 22-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Principle of natural justice

Judgement Text

1 ITA NO. 4133/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 4133/DEL/20 17 (A.Y 2013-14) (THROUGH VIDEO CON FERENCING) M/S. HOLLISTER MEDICAL INDIA PVT. LTD. E-326, NIRMAN VIHAR, NEW DELHI AABCH8555G (APPELLANT) VS DCIT CIRCLE 11(1) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST ORDER DATED 18/04/2017 PASSED BY CIT(A)-4 NEW DELHI FOR ASSESSMENT YEAR 20 13-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1.NON GRANT OF ADDITIONAL CLAIM FOR DEDUCTION OF E SOP EXPENSES AMOUNTING TO RS. 55.09.865: 1.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 4 [HEREINAFT ER REFERRED TO AS CIT(A)], NEW DELHI HAS ERRED IN CONFIRMING THE ORDE R OF THE LEARNED APPELLANT BY SH. HIMANSHU SINAH, ADV RESPONDENT BY SH. S N A NAJMI, CIT DR DATE OF HEARING 22.03.2021 DATE OF PRONOUNCEMENT 23 .03.2021 2 ITA NO. 4133/DEL/2017 DEPUTY COMMISSIONER OF INCOME TAX (DCIT), CIRCLE-11 (L), NEW DELHI. 1.2. THE LEARNED CIT(A) FURTHER ERRED IN HOLDING THAT TH E ADDITIONAL CLAIM FOR DEDUCTION OF ESOP RELATED EXPENSES AMOUNTING TO RS. 55,09,865/- IS NOT MAINTAINABLE BY RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF GOETZ (INDIA) LTD. VS COMMISSI ONER OF INCOME-TAX (2006) (284 ITR 323). 1.3. THE LEARNED CIT(A) ALSO ERRED IN HOLDING THAT THE I T CANNOT BE SAID THAT THE AO ERRED IN NOT ALLOWING THE CLAIM. 1.4. THE LEARNED CIT(A) ERRED IN DISALLOWING THE ADDITIO NAL CLAIM BY RELYING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF NTPC LTD. (229 ITR 383) STATING THAT THE POWER TO ADMIT ADDIT IONAL CLAIM LIES WITH THE ITAT AND NOT WITH THE CIT(A). IN DOING SO THE L EARNED CIT(A) DID NOT GIVE AN OPPORTUNITY TO THE APPELLANT. 1.5. THE APPELLANT COMPANY THEREFORE PRAYS YOUR HONOUR T O DIRECT THE LEARNED DCIT TO ALLOW ESOP EXPENDITURE AMOUNTING TO RS. 55,09,865. 3. THE ASSESSEE IS A WHOLLY OWN SUBSIDIARY OF HOLLI STER US. HOLLISTER INDIA IS SET UP TO ACT AS A MANUFACTURER ENGAGED IN MANUF ACTURING OF MEDICAL CATHETER. THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/11/2013 DECLARING TOTAL INCOME AT RS.2,82,98,450/-. THE ASSESSMENT U/S 143 (3) OF THE INCOME TAX ACT WAS PASSED ON 9/3/2016 THEREBY ASSESSING TOTAL INCO ME OF THE ASSESSEE AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE. 4. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) IN R ESPECT OF ASSESSMENT ORDER DATED 9/3/2016 THEREBY RAISING THE GROUND OF NON- GRANT OF ADDITIONAL CLAIM FOR DEDUCTION OF ESOP EXPENSES AMOUNTING TO R S.55,09,865/- NON GRANT OF SET UP OF BROUGHT FORWARD MAT CREDITED AND CARRY FORWARD OF BALANCE MAT CREDIT AS WELL AS IN CORRECT LEVY OF INTEREST U/S 2 34B. THE CIT(A) PARTLY ALLOWED 3 ITA NO. 4133/DEL/2017 THE APPEAL OF THE ASSESSEE. THEREBY REJECTING THE ADDITIONAL CLAIM OF ESOP EXPENSES CLAIMED BY THE ASSESSEE VIDE ORDER DATED 1 8/04/2017. 5. THE LD. AR SUBMITTED THAT THE ADDITIONAL CLAIM F OR DEDUCTION OF ESOP RELATED EXPENSES AMOUNTING TO RS. 55,09,865/- SHOUL D HAVE NOT BEEN REJECTED THEREBY RELYING BY THE DECISION OF THE HONBLE SUPR EME COURT IN CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323. THE CIT(A) SHOULD HAVE ALLOWED THE ADDITIONAL CLAIM AS PER THE PRINCIPAL LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF NTPC LTD. 229 ITR 383 AS THE POWER TO ADMIT ADDITIO NAL CLAIM LIES WITH THE CIT(A) AS WELL AND NOT JUST TRIBUNAL. THE LD. AR S UBMITTED THAT THE CIT(A)/ ASSESSING OFFICER MAY BE DIRECTED TO ALLOW ESOP EXP ENDITURE AS VARIOUS DECISION ON THIS ISSUE HAS BEEN ALLOWING THE SAID E XPENDITURE AND THE ASSESSEE IS ENTITLED FOR SAID CLAIM. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS GIVEN THIS CLAIM OF EXPE NDITURE RELATED TO ESOP VIDE LETTER DATED 23/02/2016 BUT THE ASSESSMENT ORD ER WAS ALREADY FINALISED BY THE ASSESSING OFFICER ON 9/3/2016. THE CLAIM OF ESOP EXPENDITURE HAS BEEN DETERMINED AS ALLOWABLE EXPENDITURE BY VARIOUS DECISIONS OF THE HONBLE SUPREME COURT IN FOLLOWING CASES:- (A) KEDARNATH JUTE MILL COMPANY LTD. 82 ITR 363. (B) (B) SUTLEJ COTTON MILLS LTD. 166 ITR 1 (C) UNITED COMMERCIAL BANK 240 ITR 355 (D) TAPARIA TOOLS LTD. 372 ITR 605 THESE EXPENSES WERE INCURRED IN THE COURSE OF BUSIN ESS OF ASSESSEE AND WERE LET OUT AS WELL AS EXPANDED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE ONLY. THOUGH IN THE ORIGINAL ORDER OF ASSESSMENT, THE ASSESSING OFFICER HAS NOT TAKEN COGNIZANCE OF THIS ASPECT AND THE ASSESSE E ALSO HAS NOT MADE THIS 4 ITA NO. 4133/DEL/2017 CLAIM IT IS NOT JUSTIFIABLE ON THE PART OF THE CIT( A) IN REJECTING THIS ADDITIONAL CLAIM. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO EXAMINE THIS CLAIM AS PER THE LAW AND ALLOW THESE EXPENSES/EXPENDITURE IN RES PECT OF ESOP ACCORDING TO THE PROVISIONS OF LAW. NEEDLESS TO SAY, THE ASSESS EE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT IN PRESENCE OF B OTH THE PARTIES ON THIS 23 RD DAY OF MARCH, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 23/03/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 4133/DEL/2017